2000-01-07 04:00:00 PDT On the Arroyo Seco River, Monterey County -- Jim Johnson, a native of these parts with family roots dating back to 1845, got madder and madder as he approached his beloved Arroyo Seco River, one of the few remaining free-flowing streams in California. Everything seemed perfectly natural: the serpentine line of sycamore trees was golden in the morning sun. No houses in sight, just magpies strutting on the rocky ground around a few cattle.

But a burgeoning mining operation just downstream has created a bitter upheaval in this once tranquil pocket southeast of Carmel Valley, just over the Santa Lucia Mountains, and it is echoing all the way to Sacramento and beyond.

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At river's edge, Johnson glared at the object of his rage. The river's bed has been scrapped down to bedrock by huge mining machines. Part of the river has been rechanneled in another direction. Scores of oak and sycamore trees stood high and dry on pedestals, their exposed root zones carved closely by giant mining equipment.

"This was once all beautiful land and river," said Johnson, 58, who lives less than a mile away from the river. "Now it's just a big ugly hole."

For Johnson and a growing number of his neighbors along the river, the William J. Clark Trucking Service Inc. is an out-of-control rogue operation, arrogantly mining sand, rock and gravel from the river without proper permits.

For Will Clark, head of Clark Trucking, it is a matter of misinformed local residents being blindly against mining.

"There's a handful of locals who firmly believe that we are ruining the environment, and no matter what is said or done, that will never change," said Clark, 47. "I think the idea that there is mining going on here and there are a lot of trucks on the road now just hit a raw nerve."

Yesterday, county, state and federal officials met in Sacramento to review the situation.

Local residents and environmentalists insist that the mining causes irreversible damage to the river -- to its banks, streambeds and surrounding trees. The activity also damages wildlife habitat, particularly to the steelhead trout, which are on the endangered-species list.

More broadly, they fear that Clark's mining operation represents a significant threat to the local wine industry, where grape vines are sprouting up at an ever-increasing rate. A mining operation belching noise and altering the river, coupled with increased use of water to keep the dust down, is not, they argue, compatible with wineries and vineyards.

Technically, the issue is whether Clark's firm took more of the river than it was supposed to and whether it mined outside the boundaries of its permit.

Clark is upping the ante. He wants a 20-year extension on his permit which would allow him to expand his operation upstream tenfold -- 300,000 tons of sand and gravel a year.

State and Monterey County officials say Clark has already far exceeded the limits of his permit for at least the past two years. In addition, they say he has mined outside his area, moving more than a half mile both upstream and downstream without permission.

The county issued a stop work order on Clark's operation in October. Clark responded by suing the county, asking that a judge decide Clark's rights to operate under his use permit.

It is not just Clark's operation, which has been mining the river since 1982, that upsets locals. In 1995, trucks began rolling on local roads by the hundreds after Granite Construction Company got a permit to develop an asphalt plant on Clark's site, using Clark's materials for its road building products.

Clark argues that gravel mining provides a critically important source of rock for streets, highways, schools and other projects, particularly during periods of heavy rain and floods.

His clients are part of the very fabric of Monterey County -- including Soledad Prison, every city in the Salinas Valley, plumbers, builders, stone masons and the county itself.

While county officials agree on the mining operation's importance, they also sound less than enthusiastic about Clark's long-range plans.

"That site out there is absolutely crucial to this county," said Luis Osorio, an associate planner with the county. "There are only two asphalt plants in the entire county and one of them is down there. It is quite a dilemma, but nowadays I think the environmental concerns will overwhelm everything."

Osorio, who acknowledged that the county should have been more vigilant early on, said he expects that a full environmental impact report now will be required, which could stall Clark's plans to resume mining operations this spring by as long as two years.